Shareholder Loan Agreement - Template, Sample Form Pro · EN-CA-law
✓ Valid in Canada (English) · drafted to comply with local law
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SHAREHOLDER LOAN AGREEMENT
This SHAREHOLDER LOAN AGREEMENT (the "Agreement") is made effective as of ________ (the "Effective Date").
BETWEEN:
________, of ________
(the "Shareholder")
- AND -
________, a corporation incorporated under the laws of ________, having its registered office at ________ (corporation number ________)
(the "Corporation")
(each a "Party" and collectively the "Parties").
WHEREAS the Shareholder is a holder of shares in the capital of the Corporation and has agreed to lend money to the Corporation;
AND WHEREAS the Corporation desires to borrow such money from the Shareholder on the terms and conditions set out herein;
NOW THEREFORE, in consideration of the premises and the mutual covenants contained herein, and for other good and valuable consideration (the receipt, sufficiency, and adequacy of which is hereby acknowledged), the Parties agree as follows:
1. LOAN AMOUNT AND ADVANCE
1.1. The Shareholder agrees to lend to the Corporation, and the Corporation agrees to borrow from the Shareholder, the principal sum of $________ (________ Dollars) (the "Principal Amount").
1.2. The Principal Amount shall be advanced by the Shareholder to the Corporation on or before ________ by way of ________.
1.3. The Corporation acknowledges receipt of, or its entitlement to receive, the Principal Amount and that this Agreement evidences a bona fide debt owing by the Corporation to the Shareholder.
2. INTEREST
2.1. The Principal Amount, and any amount remaining outstanding from time to time, shall bear interest at a rate of ________% per annum, calculated ________ and not in advance, both before and after maturity, default, and judgment.
2.2. The Parties acknowledge and intend that the rate of interest payable under this Agreement shall not exceed the maximum rate permitted by law, including section 347 of the Criminal Code (Canada). If any interest payable hereunder would otherwise exceed such maximum rate, the rate shall be reduced to the maximum lawful rate and any excess paid shall be applied to the Principal Amount or, if the Principal Amount has been repaid, refunded to the Corporation.
3. TERM
3.1. The term of this Agreement shall commence on the Effective Date and shall continue until ________ (the "Maturity Date"), unless otherwise extended or terminated by mutual agreement of the Parties in writing.
4. REPAYMENT
4.1. The Corporation shall repay the outstanding Principal Amount, together with all accrued and unpaid interest thereon, in one lump sum on ________.
4.2. All payments shall be made in lawful money of Canada to the Shareholder at the address set out above or at such other place as the Shareholder may designate in writing.
4.3. This is an open loan, and the Corporation may make additional payments toward the outstanding balance during the term beyond the repayment required under section 4.1 without notice, bonus, or penalty.
4.4. Notwithstanding the foregoing, the Parties acknowledge that demand for repayment, and any repayment, shall be subject to the Corporation remaining able to satisfy the solvency requirements of applicable corporate legislation, and the Shareholder acknowledges that the Corporation may be restrained from making a payment that would render it unable to pay its liabilities as they become due.
5. DEFAULT
5.1. An event of default shall occur if the Corporation fails to make any payment of principal or interest when due pursuant to this Agreement, and such failure subsists for fifteen (15) days after written notice thereof from the Shareholder.
5.2. In addition to any other rights exercisable at law or in equity, upon any event of default by the Corporation, the Shareholder may, on seven (7) days' written notice to the Corporation, declare the entirety of the outstanding Principal Amount and all accrued interest immediately due and payable.
5.3. Any and all reasonable costs, including legal fees on a full indemnity basis, incurred by the Shareholder in enforcing this Agreement as a result of a default shall be recoverable by the Shareholder and added to the Principal Amount and interest.
6. PREPAYMENT
6.1. The Corporation shall be entitled to prepay all or any portion of the Principal Amount, together with any accrued and unpaid interest thereon, at any time prior to the Maturity Date without notice, bonus, or penalty. Any such prepayment shall first be applied to any accrued and unpaid interest and thereafter to the outstanding Principal Amount.
7. RANKING
7.1. The indebtedness evidenced by this Agreement is ________ and shall rank in priority as ________. The Shareholder agrees to execute such postponement or subordination agreements as may reasonably be required by the Corporation's senior lenders from time to time.
8. ASSIGNMENT
8.1. Neither Party may assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the other Party. This Agreement shall be binding upon and enure to the benefit of the Parties and their respective heirs, executors, administrators, successors, and permitted assigns.
9. TAXES
9.1. Each Party shall be solely responsible for the proper reporting and filing of its own income taxes and shall be liable to pay any such taxes owing. The Parties acknowledge that this Agreement may be subject to the provisions of the Income Tax Act (Canada), including the rules respecting shareholder loans, and each Party shall obtain its own independent tax advice.
10. NOTICES
11. GENERAL PROVISIONS
11.1. Language. All communications made or notices given under this Agreement shall be in the English language.
11.2. Binding Agreement. Subject to section 8, this Agreement and any rights granted hereunder shall enure to the benefit of and be binding on the Parties and their respective successors and permitted assigns.
11.3. Amendments. This Agreement may be amended only by a written instrument signed by both Parties.
11.4. Time of Essence. Time shall be of the essence in this Agreement.
11.5. Waiver. No waiver of any provision of this Agreement shall be effective unless made in writing and signed by the Party against whom the waiver is sought to be enforced. No waiver of any condition shall be construed as a further or continuing waiver of the same or any other condition.
11.7. Entire Agreement. This Agreement constitutes the entire agreement between the Parties and supersedes all prior or contemporaneous agreements, whether written or oral. No inducements, representations, or promises not contained within this Agreement have any force or effect.
11.8. Headings. The headings in this Agreement are used for convenience only and shall not be construed to limit or affect the terms of this Agreement.
11.9. Counterparts. This Agreement may be executed in counterparts and delivered by electronic means, all of which together shall constitute one and the same Agreement.
11.10. Independent Legal Advice. Each Party acknowledges that it has had the opportunity to obtain independent legal advice with respect to this Agreement and has either obtained such advice or voluntarily declined to do so.
11.11. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Province of ________ and the federal laws of Canada applicable therein, and the Parties irrevocably attorn to the exclusive jurisdiction of the courts of the Province of ________.
12. EXECUTION
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.
SHAREHOLDER
Name: ________
Signature: _________________________
Date: ________
Witness Name: ________
Witness Signature: _________________________
CORPORATION
Name: ________
Per: _________________________
Name of Authorized Signing Officer: ________
Title: ________
Date: ________
I have authority to bind the Corporation.
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